SACRAMENTO  San Diego-area defense operations are known for their worldwide military prowess, but when it comes to Sacramento-based politics, they were no match for San Diego Gas & Electric and other statewide electrical utilities during a recent Capitol skirmish.

The issue involves electrical generation on California military bases. Military bases want to generate more renewable (and other) forms of energy on the base, to help meet federal clean-energy guidelines and promote self-sufficiency, but state regulations are quashing their ability to do this.

The state has a “Net Energy Metering” program which requires utility companies to provide a financial credit to people who generate their own power onsite by installing solar panels, windmills or other renewable energy projects. The law, designed mainly for homes and businesses, allows each “premise” to generate one megawatt of electricity. Entire military bases are deemed a single premise.

Meanwhile, the Department of Defense is pushing all of its bases to become more energy efficient and to generate half of their energy via green sources by 2020. California’s bases say they are hampered by the one megawatt limit and by other bureaucratic rules that make it tougher to connect to the energy grid.

“Military installations are akin to small cities,” according to a letter the U.S. Department of Defense sent to the California Assembly. “The (one megawatt) limit that is appropriate for an individual business does not work for a military installation.” A single San Diego area military installation has electrical loads of 25 times that level, it explained.

So Bay Area Assemblyman Kevin Mullin, a Democrat, authored AB 2649, which lifts the one megawatt cap and lets the bases generate far more electricity for their own use only.

It was odd reading Defense officials' arguments touting “sustainability” and environmental groups plugging the security advantages of energy self-sufficiency. But both groups have a common interest.

The bill passed the Assembly overwhelmingly. When it moved to the Senate, though, it ran into problems. Not surprisingly, they involve money. As a Senate committee analysis explained, “There are many different charges built into electric rates … . Each of those charges serve a purpose and generally don’t disappear if a customer chooses to generate their own electricity.”

Net Energy Metering exempts these small-scale electricity generators from paying many of these fixed charges. These include funding to help low-income people pay their bills and for energy efficiency programs, payments for bonds that were incurred after the energy crisis and payments for nuclear decommissioning.

“If they aren’t paying, someone else is paying,” SDG&E spokeswoman Stephanie Donovan told me. In its letter opposing the bill, Pacific Gas and Electric Co. argued that “(T)his bill would simply shift millions of dollars that are appropriately paid by the U.S. military to other California customers who will receive no benefit from this program.”

In other words, the more electricity that is generated by individuals — businesses, homes, military bases — the less that is generated by the power companies. But those companies have a host of fixed fees and costs. So those costs will be higher for everyone else on the grid.

Mullin downplays the cost-shifting argument. “Every Navy base will have to pay full freight for the electricity from the grid,” he said in a statement. “(T)he new generation allowed under this bill will reduce demand on the grid and supplant electricity that would otherwise have to be procured or built at ratepayer expense.”

The utilities have long been critical of the metering program because they are forced to take whatever energy is provided, even during non-peak hours – and they must pay a higher rate than they would pay on the open market. Specifically, they saw this bill as bad precedent — i.e., it undermines broader “rate reform” efforts that would allow fixed costs to be more fairly divvied up.

But the debate is over for now. The Senate completely gutted the bill. It offers help reducing a few regulatory barriers at best, but maintains the one-megawatt limit. The utilities are pleased with the final result, but military officials are frustrated.

“Suppose I’m a sailor and living in military housing. I’m scratching my head,” said Larry Blumberg, executive director of the San Diego Military Advisory Council. “The Department of Defense has all these initiatives about reusable energy. Why don’t I have a solar panel on my roof?”

It’s even more head-scratching when one realizes that the state Department of Corrections gained a similar provision removing the one-megawatt cap in the state budget. But, as always, these complex financial matters always come down to Capitol politics. And, apparently, defense officials didn’t have as good of a battle plan as the utilities.